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Full Text of this Amendment

SA 3561. Ms. MURKOWSKI (for herself, Mr. STEVENS, Ms. CANTWELL, Mr. SMITH, and Mrs. MURRAY) submitted an amendment intended to be proposed by her to the bill H.R. 2419, to provide for the continuation of agricultural programs through fiscal year 2012, and for other purposes; which was ordered to lie on the table; as follows:

At the appropriate place insert the following:
SEC. __X. TAX TREATMENT OF INCOME RECEIVED IN CONNECTION WITH THE EXXON VALDEZ LITIGATION.
(a) Income Averaging of Amounts Received From the Exxon Valdez Litigation.--For purposes of section 1301 of the Internal Revenue Code of 1986--
(1) any qualified taxpayer who receives any qualified settlement income in any taxable year shall be treated as engaged in a fishing business (determined without regard to the commercial nature of the business), and
(2) such qualified settlement income shall be treated as income attributable to such a fishing business for such taxable year.
(b) Contributions of Amounts Received to Retirement Accounts.--
(1) IN GENERAL.--Any qualified taxpayer who receives qualified settlement income during the taxable year may, at any time before the end of the taxable year in which such income was received, make one or more contributions to an eligible retirement plan of which such qualified taxpayer is a beneficiary in an aggregate amount not to exceed $250,000.
(2) TIME WHEN CONTRIBUTIONS DEEMED MADE.--For purposes of paragraph (1), a qualified taxpayer shall be deemed to have made a contribution to an eligible retirement plan on the last day of the taxable year in which such income is received if the contribution is made on account of such taxable year and is made not later than the time prescribed by law for filing the return for such taxable year (not including extensions thereof).
(3) TREATMENT OF CONTRIBUTIONS TO ELIGIBLE RETIREMENT PLANS.--For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to paragraph (1) with respect to qualified settlement income, then--
(A) except as provided in paragraph (4)--
(i) to the extent of such contribution, the qualified settlement income shall not be included in taxable income, and
(ii) for purposes of section 72 of such Code, such contribution shall not be considered to be investment in the contract, and
(B) the qualified taxpayer shall, to the extent of the amount of the contribution, be treated--
(i) as having received the qualified settlement income--
(I) in the case of a contribution to an individual retirement plan (as defined under section 7701(a)(37) of such Code), in a distribution described in section 408(d)(3) of such Code, and
(II) in the case of any other eligible retirement plan, in an eligible rollover distribution (as defined under section 402(f)(2) of such Code), and
(ii) as having transferred the amount to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution.
(4) SPECIAL RULE FOR ROTH IRAS AND ROTH 401(k)s.--For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to paragraph (1) with respect to qualified settlement income to a Roth IRA (as defined under section 408A(b) of such Code) or as a designated Roth contribution to an applicable retirement plan (within the meaning of section 402A of such Code), then--
(A) the qualified settlement income shall be includible in taxable income, and
(B) for purposes of section 72 of such Code, such contribution shall be considered to be investment in the contract.
(5) ELIGIBLE RETIREMENT PLAN.--For purpose of this subsection, the term ``eligible retirement plan'' has the meaning given such term under section 402(c)(8)(B) of the Internal Revenue Code of 1986.
(c) Treatment of Qualified Settlement Income Under Employment Taxes.--
(1) SECA.--For purposes of chapter 2 of the Internal Revenue Code of 1986 and section 211 of the Social Security Act, no portion of qualified settlement income received by a qualified taxpayer shall be treated as self-employment income.
(2) FICA.--For purposes of chapter 21 of the Internal Revenue Code of 1986 and section 209 of the Social Security Act, no portion of qualified settlement income received by a qualified taxpayer shall be treated as wages.
(d) Qualified Taxpayer.--For purposes of this section, the term ``qualified taxpayer'' means--
(1) any individual who is a plaintiff in the civil action In re Exxon Valdez, No. 89-095-CV (HRH) (Consolidated) (D. Alaska); or
(2) any individual who is a beneficiary of the estate of such a plaintiff who--
(A) acquired the right to receive qualified settlement income from that plaintiff; and
(B) was the spouse or an immediate relative of that plaintiff.
(e) Qualified Settlement Income.--For purposes of this section, the term ``qualified settlement income'' means any interest and punitive damage awards which are --
(1) includible in taxable income, and
(2) received (whether as lump sums or periodic payments) in connection with the civil action In re Exxon Valdez, No. 89-095-CV (HRH) (Consolidated) (D. Alaska) (whether pre- or post judgment and whether related to a settlement or judgment).

(As printed in the Congressional Record for the Senate on Nov 7, 2007.)